The Strawhecker Group
TSG Reports
Jan 2015

Comparable New Mechant Profitability

The following graph illustrates Comparable New Merchant Profitability, which is the Go-To-Market Net Spread as compared to the existing merchants in a portfolio, for different volume tiers.

Net Spread is defined as gross revenue charged to a merchant less total processing cost of sales divided by sales volume. This is essentially the profitability of different merchant sizes compared to the existing portfolio at the time the account is boarded.

https://files.ctctcdn.com/347071db201/d2b3a92f-9e85-416d-86a7-56aee3800f41.pdf

TSG Reports
Jan 2015

TSG’s Northeast Acquirers Association Recap

TSG attended the Northeast Acquirers Association (NEAA) conference in Boston this week, which was very well attended. Boston served as host to the event after being held in Mt. Snow, VT for over a decade. Some highlights and key observations included:

ISOs and acquirers are quite certain that very few small business will be prepared (let alone even aware) of the EMV liability shift occurring in October 2015. Many believe that merchants will weigh the pros and cons of investing in EMV-capable terminals and decide to take the risk of a loss. However, the liability shift certainly creates a revenue opportunity for ISOs and acquirers that should not be missed. In fact, many attendees anticipate some processors and acquirers to experiment with EMV non-compliance fees.

https://files.ctctcdn.com/347071db201/201fc113-1957-420e-baf6-88df92749193.pdf

TSG Reports
Jan 2015

Payments Industry 2015; No Clever Predictions Just Thoughtful Analysis

Prediction lists are everywhere around the start of a new year and where there’s a lot of speculation, clever headlines often take the stage over the sharing of insight. So, with that said, take a look at The Strawhecker Group’s careful analysis of what 2015 may hold, without the leaps of faith…...or clever headlines.

2014 was a big year for the payments industry. The introduction of Apple Pay garnered a lot of attention, the variety of data breaches got major payment players (and the public) focused on security issues and major payment players started to lay the foundation for a digital ecosystem.

https://mlsvc01-prod.s3.amazonaws.com/347071db201/a437d7ac-fbba-420d-ae5c-8d598c...

TSG Reports
Dec 2014

2014 U.S. Payments Search Trends

As a wrap-up to the year, The Strawhecker Group has put together a list of keywords, related to the Payments Industry, to illustrate how they have trended using Google since the beginning of 2014. Specific 'related search words' have been removed from keywords to ensure a better estimate of trends related to the Payments Industry.

Bitcoin saw the highest mark, as it spiked to the highest point at the end of February when Mt. ox went offline, however it has since dropped significantly through the rest of the year. As expected, Apple Pay jumped up after the initial announcement in September, and again in October when it went live for consumer usage.

https://origin.library.constantcontact.com/doc201/1111273965379/doc/iHcahan0FdfS...

TSG Reports
Dec 2014

The 2014 Payments Market: The Wrap Up

Growth prospects for the payments industry in 2014 were clearly brighter compared to the past several years as the economy continued to heal, consumer confidence rebounded and the regulatory and political environment settled down. The brightened growth prospects appeared to drive a shift in the mindset of payment players. No longer were payment players taking a traditional wait and see approach in 2014, their mindset evolved into a take action and make change approach.

As mobile solutions garnered attention, EMV awareness heightened, security breaches hit headlines and consumer engagement models evolved, traditional and non-traditional payment players across the spectrum implemented and piloted new technologies and collaborated with each other in order to move forward and provide solutions for the industry's most pressing needs. With that said, the payments industry continued to witness a rapidly changing landscape in 2014, one which shaped the strategies and roadmaps of the players.

https://origin.library.constantcontact.com/doc201/1111273965379/doc/DQOrg8dfby12...

TSG Reports
Nov 2014

New ETA/TSG Research Estimates 2014 4Q Electronic Spending Will Increase 4.0% Over 2013 to $890B

One occasion of note is on the payments horizon: the holiday shopping season. To meet it head-on, ETA is offering projections on holiday spending trends and has released important educational resources for merchants to navigate the evolving payments landscape. Payments consultancy firm The Strawhecker Group estimates that 2014 fourth quarter electronic spending will increase 4.0% over 2013 to $887 billion.

http://origin.library.constantcontact.com/download/get/file/1111273965379-641/ET...

TSG Reports
Nov 2014

TSG COMMENTARY: Worldpay Enters Agreement To Acquire SecureNet; Further Boosts Omni-Channel Processing Strength

Guest Columnist Jared Drieling

This week, Worldpay, a global payments technology company based in London, announced that it had entered into a definitive agreement to acquire Austin-based SecureNet, a market leader in multi-channel commerce technology. The acquisition price was undisclosed. The transaction is expected to close in December 2014, pending regulatory approval. SecureNet serves more than 17,000 merchants, with processing volumes exceeding $19 billion annually and is principally owned by Chicago-based Sterling Partners. SecureNet's merchant count and dollar volumes likely include clients served via card processing, ACH, and its virtual terminal services and products.

Meanwhile, Worldpay is expected to process a total of nearly 10 billion transactions with a value of nearly half a trillion dollars in 2014. Worldpay is owned by private equity firms Advent International and Bain Capital. The acquisition of SecureNet by Worldpay was executed in order to leverage the company's merchant cloud-based solutions which integrate point-of-sale (POS), mobile and eCommerce payment processing into Worldpay's direct acquirer ecosystem, providing a distribution advantage. SecureNet's multi-channel inventory management system will also enable Worldpay to offer the ability to provide actionable, SKU-level data insights to clients to help them grow their business.

http://origin.library.constantcontact.com/download/get/file/1111273965379-637/TS...

TSG Press
Oct 2014

TSG's NewsFilter Surpasses 20,000 Subscribers

The Strawhecker Group (TSG), a management consulting company focused on the global electronic payments industry, is pleased to announce that NewsFilter, a weekly email newsletter that provides the industry with need-to-know payments news and TSG insights, is now delivered to over 20,000 payments professionals each week.

Since NewsFilter's inception in 2006, TSG's subscriber base has expanded to include professionals from every facet of the industry including: ISOs, banks and financial institutions, card brands, issuers, bank specialty lenders and private equity firms, major merchants, hardware providers, software vendors, resellers, and other various payments related companies such as prepaid card providers, technology companies and electronic payment support firms.

https://origin.library.constantcontact.com/doc201/1111273965379/doc/9v78YvXRpGfo...

TSG Reports
Oct 2014

Special Edition ETA/TSG Economic Indicators Report

The report, produced by ETA and The Strawhecker Group, examines the top five topics impacting the industry this year including: data breaches, PayPal's split from eBay, Apple Pay, the competition between Amazon and Square, and EMV. The report then discusses payments indicators currently affecting the industry. One such indicator, the TSG Payments Index (TSGPX), compares payments companies to the S&P 500 and finds that a $100 investment in the TSGPX in Q1 2007 would now be valued at $286, as compared to $138 if invested in the S&P 500. Other indicators to follow include a look at the balance between merchant attrition and growth, and a review of 90 payments acquisitions from 2000 - 2014.

https://origin.library.constantcontact.com/doc201/1111273965379/doc/xJAObrYCIujK...

TSG Reports
Sep 2014

TSG Commentary on the Apple Pay Announcement

https://origin.library.constantcontact.com/doc201/1111273965379/doc/FuGTgRuU194T...

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